Greecehog Day

Am I the only one sick of hearing about crisis after crisis between Greece and the rest of the Eurozone? Of a desperate struggle to pay the debts and get support? Of fears Greece is going to crash out of the Euro?

The single currency was always a political project first and an economic one second. The convergence criteria were fudged to allow in as many countries as possible and the expectation was that the separate economies would quickly learn to converge. A period of economic growth also encouraged optimism and complacency - the UK may not have joined then or since but it was a period when our government smugly talked of having ended boom and bust.

And then came the not quite global crisis. Each country has different circumstances and needs to take different measures to get itself out of the mess. Democracy also demands the people decide just where the country will escape to. But the Eurozone doesn't allow for that. Instead it severely restricts the options available to the Greek government and demands cuts on a scale like nothing we've endured here.

And so we get this endless cycle as Greece and other European countries face off with seemingly no end in sight.

Somewhere I can hear my old Economics teacher saying "I told you so".

Maybe it's time to admit the inevitable. To say that Grexit is not a question of if but when. To stop pretending Greece can do enough to meet both its obligations and its voters' demands. To say that ever closer European integration is not an irreversible process. It will be an immense upheaval - but there's no shortage of those at the moment. It will bring immediate economic hardship - but that's already there. What it will do is allow Greece to find its own way forward and follow an economic policy that's the best for Greece rather than continuing the pretence that what's good for Germany is always good for Greece.

It's time to let Greece leave the Euro.

Economics, schnomics?

Far too many years ago I took Economics at A-Level. I can't pretend to remember too much from it now, other than the details of the Hogg Cycle, reasons why we should never adopt the Euro, a vague outline of the Keynesian and Monetarist theories and a sense that all economic theories were considered bust and that "muddling along" was about as good a method of economic management as any other. (Oh and that Keynes is pronounced "canes" not "keens", but that was only really useful at the University of Kent where the name one of the colleges is frequently mispronounced.) Ah the 1990s was such an innocent era.

Flash forward many years and we're almost now at the point where arguments about what economic theory of management should be followed are about to become a live political issue again. Alastair Darling, the Minister for Invisibility who is apparently also Chancellor of the Exchequer, has recently praised John Maynard Keynes. So too has the Daily Mail. (ConservativeHome: CentreRight: Daily Mail now calling for Keynesian borrowing-funded tax cuts) And it's even been suggested that "The debate is now between two forms of Keynesianism" so we even see the debate skipped altogether!

It's partially because my business knowledge has rusted that I haven't commented much on the current economic troubles. At times some of the figures quoted have seemed fantastic, whilst the markets all appear to be yo-yoing, changing direction with every government announcement. The main role for government has to be to create the conditions for the markets to strengthen and protect the ordinary public from problems beyond their control. If we had back into too much control and planning in the economy then long term prospects for growth will be stifled, to the detriment of us all.

Debates on economic theory will often go over the heads of many - I still have problems understanding what the US Presidential election of 1896 was about with a battle over the Republicans advocating Gold vs the Democrats advocating Silver (now there's an interesting thought about how to change political colours in the US!) - but can ultimately determine whether there are jobs, whether one can get an essential loan, if one is able to invest and so forth. I hope that the next such debate will come in terms people can understand.